U.S. inflation increased by less than expected in November but remained above the Federal Reserve’s target, according to the first set of consumer price data released since the government shutdown ended in mid-November.
Data published Thursday by the Bureau of Labor Statistics showed that the U.S. consumer price index rose 2.7% year over year in November. This marked a slowdown from the 3.0% reading reported in September and came in below market expectations of 3.1%.
Core inflation, which excludes volatile food and energy prices, also eased. The core CPI rose 2.6% annually, under the forecast of 3.0%.
The BLS had previously said it would not release CPI data for October after it was unable to collect sufficient information during the prolonged government shutdown. While the November report was published, the agency noted that it does not include one-month percentage changes for November 2025 in categories where October data was missing.
Goldman Sachs warned that the partial nature of the inflation report could lead to added volatility. The bank said collecting price data mainly in the second half of the month may bias readings lower, as goods prices often decline sharply from mid-November due to holiday discounting.
Morgan Stanley echoed the caution, saying the softer-than-expected inflation figures may reflect technical factors rather than a clear shift in underlying price pressures. The bank noted that prices in some categories may have been carried forward, effectively assuming no inflation. If these issues are responsible for the weakness, inflation could pick up again in December.
Despite the slowdown, inflation remains above the Federal Reserve’s preferred level of around 2%, making price stability difficult to achieve. However, signs of a weakening labor market have increased expectations for additional interest rate cuts.
The Federal Reserve lowered interest rates by 25 basis points last week, bringing its key policy rate to a range of 3.5% to 3.75%, the lowest level since 2022. Still, policymakers remain divided on the path ahead, with several officials dissenting and others expressing reservations about further easing in their policy projections.
